Date: April07, 2019
Daily World Economic and Financial News
(CNBC): April07, 2019 --- The U.S. dollar dropped on Friday after San Francisco Federal Reserve Bank President Mary Daly suggested the central bank may hold off on raising interest rates in 2019, bolstering risk appetite in the currency market. The Fed probably will not need to raise rates this year, given a lowdown in economic growth and muted inflation, Daly told the Wall Street Journal in an interview published on Friday.
(REUTERS): April07, 2019 --- Sterling weakened on Friday as doubts swirled over British Prime Minister Theresa May’s attempt to further delay Brexit. May wrote to Brussels asking to delay Britain’s EU departure until June 30 to allow lawmakers to agree a withdrawal deal. But France and the Netherlands expressed doubt about the plan and that, combined with lingering fears of a no-deal Brexit, sent the pound to a session low of $1.3014, down 0.4 percent on the day. The impact of a long Brexit delay on sterling is unclear. The pound would gain if a delay led eurosceptic lawmakers to back the deal May negotiated with the EU or brought about a reversal of the 2016 Brexit referendum. For most of March the pound was stuck near $1.31.
(REUTERS): April07, 2019 --- Sterling will rally 3 percent if the Brexit gridlock is resolved and Britain looks likely to leave the European Union with a d The pound tanked after the June 2016 referendum result — as predicted by Reuters polls beforehand — and was trading at around $1.31 on Thursday, far weaker than it was ahead of the vote. eal but the currency will tumble 5 percent if negotiations fail, a Reuters poll found.
(REUTERS): April07, 2019 --- The Chinese yuan will hold on to its recent gains against the dollar, and likely make a modest push forward from current levels over the coming year, as optimism about a U.S.-China trade deal offsets anxiety over weak domestic economic growth, a Reuters poll showed.
(REUTERS): April07, 2019 ---The euro dipped on Thursday as weak German economic data and a report that Italy would slash its growth forecasts prompted fears about weakening growth in the region.
(WSJ): April07, 2019 ---Trade talks between Chinese and U.S. negotiators wrapped up in Washington with no clear timeline for resolution, but with both sides touting progress and vowing to continue talking via videoconference.
The EUR/USD pair is poised to finish the week as it started it at around 1.1230, having, however, posted a lower low and a lower high for a third consecutive week. The shared currency was heavily weighed by the Union's data confirming the gloomy economic situation. Not that US data was much better, and there were some soft-figures there too, but the comparison of the overall health favors the world's largest economy.
EU March preliminary inflation was slightly below expected, up by 1.4% YoY in the month vs. 1.5% previously while core CPI printed 0.8%, missing the market's forecast of 0.9% and below the previous 1.0%. More harmful for the EUR, the final versions of the Markit Manufacturing PMI for the same month suffered downward revisions, with the German index down to 44.1, its lowest since mid-2012 and the EU index downwardly revised to 47.5. Activity contracted sharply, and despite the services figures released later in the week were slightly better than initially estimated. Also, European Retail Sales were upbeat, up in February 0.4% MoM and 2.8% YoY, surpassing the market's forecasts. German Factory Orders plunged by 4.2% MoM and by 8.4% YoY in February.
In the US, data was mixed. The official ISM index surged to 55.3 surpassing the expected 54.5 and above the previous 54.2, but the Non-Manufacturing PMI missed the market's forecast, down to 56.1 in March from 59.7 in February. Also, February Durable Goods Orders were slightly better-than-expected, still down by 1.6%. The less volatile ex-transportation measure was up by a measly 0.1% MoM, while on a year-on-year basis growth cooled to 3.3%, while the most-relevant nondefense ex-aircraft figure declined by 0.1% MoM. February Retail Sales were upbeat.
Those mixed readings leaned the scale in favor of the greenback. By the end of the week, the Nonfarm Payroll report failed to bring definitions, as it also resulted mixed. The country added 196K new jobs, surpassing market's expectations, while February reading was upwardly revised t0 33K from 20K. The unemployment rate remained steady at 3.8%, despite the participation rate decreased to 63.0%, anyway beating expectations. Wages' growth disappointed, up by 0.1% MoM, while average hourly earnings rose 3.2% from a year earlier, accelerating at a slightly slower pace than in February. These numbers were welcomed by equities traders, as lessening inflationary pressures indicate the Fed will maintain its on-hold stance for longer but remain far from building the case for a rate cut.
The upcoming week will be a bit more light in terms of macroeconomic releases, with the focus on Wednesday, when the ECB will have its Monetary policy meeting, and the US ill publish an inflation update and the latest FOMC Minutes.
Germany will kick start the week publishing its February Trade Balance data with the surplus seen shrinking to €17.0B. Later in the week, the country will unveil the final readings of March inflation, seen further lower than previously estimated. Germany is the largest European economy, and soft macroeconomic data will keep on weighing the EUR.
International & Financial Terms
- hold off: to not do something immediately:
- bolster : to support or improve something or make it stronger
- swirl: to move quickly with a twisting, circular movement, or to make something do this
- gridlock: situation in which no progress can be made
Compiler: A Bank Dealing Room Section
Management of International Deputy /The Expert In Charge Of Dealing Room